The recent price actions of Gold (XAU/USD) have started to trade firmer since last Friday, 22 August, with a gain of 1%, on increased hopes that the US Federal Reserve is likely to enact its first interest rate cut of 2025 in the next month's FOMC meeting.
The Asian session saw a shaky start as US President Donald Trump posted on his Truth Social account that Federal Reserve Governor Lisa Cook will be removed effective immediately.
The immediate reaction saw a gauge of the US dollar retreat as much as 0.3% and gold rose as much as 0.6% to around $3385/oz.
The Australian dollar is showing limited movement on Tuesday. In the European session, AUD/USD is trading at 0.6482, down 0.01% on the day.
Oil prices dropped by over 1% after they had risen by almost 2% on Monday to start the week on the front foot. Traders are watching the war in Ukraine and the possibility of interruptions to Russia's oil supply.
Brent crude oil fell by $1.08, or 1.57%, to $67.72 per barrel. It had reached its highest price since early August just a day earlier. West Texas Intermediate (WTI) crude oil also dropped, losing $1.13, or about 1.74%, to $63.67.
The US Dollar has been in a weird trading zone since the contradicting NFP report from the beginning of the month (forcing a dovish hand) and the strong PPI report that has shown the appearance of tariff effects (forcing a hawkish hand).
Friday's ecstatic trading brought all risk-assets including Equity indices, cryptocurrencies and FX currencies higher.
Although real wage growth was strong in June, it has not yet returned to the double-digit levels seen in previous years. We expect negative perceptions of household finances to persist. Weak consumer confidence continues to be a problem for the economy
It’s becoming increasingly clear that Trump’s dismissal of Lisa Cook is not going to have a big short-term FX impact. The implications may only play out in the longer run, as the current focus remains more on data. French politics also appears to be treated with plenty of caution by the currency market. We think EUR/USD can stabilise today
French politics is injecting uncertainty into eurozone bond markets, but the spread widening remains more confined to French bonds for now. Long-end yields globally have felt supply and fiscal pressures, yet the challenge to central bank independence puts a unique focus on the US curve
The week started badly for French assets, as the French PM called for a confidence vote that opposition parties immediately responded to with a 'no confidence.' The EURUSD consolidated below its 50-DMA despite a broadly pressured US dollar, which feels the pinch of a growing dispute between Federal Reserve (Fed) Governor Lisa Cook and US President Donald Trump, who attempted to fire her without necessarily having the authority to do so.
Oil prices came under pressure as US secondary tariffs on India come into effect, taking the total levy to 50%
Hopes for a swift resolution to the Russia-Ukraine conflict have proven vain. Discussions between Donald Trump, Vladimir Putin, and Volodymyr Zelenskyy yielded no breakthrough, with market expectations for a 2025 ceasefire dropping from around 40% to below 25%.
A mild miss in last week’s July inflation figures provided a bit of support for the Canadian dollar, which posted weekly gains against most other G10 currencies.
The Swiss franc recovered some of its losses last week. Economic data continues to point to disruptions from Trump’s upending of global trade. After a jump in June, real exports sank in July (-2.7% MoM). US-bound exports rose 1.1%, as buyers raced against time to avoid paying steep levies on products such as watches or machinery.
Eurozone economic data for the first half of the year has been distorted by US tariffs.
The New Zealand dollar has steadied on Monday. In the European session, NZD/USD is trading at 0.562, down 0.07% on the day. On Friday, the New Zealand dollar shot up 0.82%, its best one-day performance since June.
Having enjoyed a brief session on Friday of unalloyed joy as Fed Chair Jerome Powell hinted at a September rate cut, financial markets may now face some uncertainty on political developments in France and the US. We're still happy with a bearish story for the dollar, but it might have to be the more defensive Japanese yen or Swiss franc which takes the lead now
Eurozone optimism has pushed the German two-year yield to the brink of pre-'Liberation Day' levels. Just shy of 2%, the balance of risk is towards near-term lower yields again. US rates are quick to fade the dovish move from last Friday, and we think the back end of the curve will want to test higher still
This week could have started calmly, with investors digesting Friday's policy shift at the Federal Reserve (Fed), consolidating recent gains and repositioning ahead of the all-important Nvidia earnings due Wednesday. But instead, Donald Trump chose to keep markets on edge by announcing the dismissal of Fed Governor Lisa Cook over alleged mortgage fraud.